Introduction The following discussion and analysis is intended to help the reader understand the Trust’s financial condition, results of operations, liquidity and capital resources. This discussion and analysis should be read in conjunction with the Trust’s unaudited condensed financial statements and the accompanying notes included in this Quarterly Report on Form 10-Q (“Quarterly Report”) and the Trust’s audited financial statements and the accompanying notes included in the Trust’s 2025 Annual Report. Cautionary Statement Regarding Forward Looking Statements Certain information included in this Quarterly Report contains, and other materials filed or to be filed by the Trust with the SEC (as well as information included in oral statements or other written statements made or to be made by the Trust) may contain or include, forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) and Section 27A of the Securities Act of 1933, as amended. Such forward-looking statements may involve or may concern, among other things, the amount and variability in capital expenditures by Hilcorp, drilling activity, development activities, production efforts and volumes, hydrocarbon prices, estimated future net revenues, estimates of reserves, the results of the Trust’s activities, the differences between Hilcorp’s estimated revenue and actual revenue, and regulatory matters. Such forward-looking statements generally are accompanied by words such as “may,” “will,” “based,” “estimate,” “expect,” “predict,” “project,” “anticipate,” “believe,” “plan,” “intend,” or other words that convey the uncertainty of future events or outcomes. Such statements are based on certain assumptions of the Trustee and by Hilcorp, with respect to future events; are based on an assessment of, and are subject to, a variety of factors deemed relevant by the Trustee and Hilcorp; and involve risks and uncertainties. However, whether actual results and developments will conform with such expectations and predictions is subject to a number of risks and uncertainties which could affect the future results of the energy industry in general, and the Trust and Hilcorp in particular, and could cause those results to differ materially from those expressed in such forward-looking statements. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the expected consequences to, or effects on, Hilcorp’s business and the Trust. Such statements are not guarantees of future performance and actual results or developments may differ materially from those projected in such forward-looking statements. You should not place undue reliance on any forward-looking statements. All forward-looking statements speak as of the date of this Quarterly Report. The Trust does not undertake any obligation to release publicly any revisions to the forward-looking statements to reflect events or circumstances after the date of this Quarterly Report or to reflect the occurrence of unanticipated events, unless required by applicable law. Overview The Trust is an express trust created under the laws of the state of Texas by the San Juan Basin Royalty Trust Indenture entered into on November 1, 1980, between Southland and The Fort Worth National Bank (the “Original Indenture”). The Trust refers to the Original Indenture as it was amended and restated on September 30, 2002, further amended and restated on December 12, 2007, and further amended by the First Amendment to the San Juan Basin Amended and Restated Royalty Trust Indenture on February 24, 2024 as the "Indenture” in this Quarterly Report. PNC Bank, National Association (“PNC Bank”), served as the previous Trustee of the Trust from October 8, 2021, through February 14, 2024. Effective February 15, 2024, Argent Trust Company, a Tennessee chartered trust company (“Argent”), became the Trustee of the Trust. The principal office of the Trust is 3838 Oak Lawn Avenue, Suite 1720, Dallas, Texas 75219 (telephone number (855) 588-7839). Argent Trust Company, as successor trustee of the Trust, is subject to the terms and conditions of the Indenture. The defined term “Trustee” as used herein shall refer to PNC Bank (which maintains its offices at 2200 Post Oak Blvd., Floor 18, Houston, TX 77056) for periods from October 8, 2021, until February 14, 2024, and shall refer to Argent Trust Company (which maintains its offices at 3838 Oak Lawn Ave, Suite 1720, Dallas, Texas 75219) for periods on and after February 15, 2024. The Conveyance and the Royalty Pursuant to the Net Overriding Royalty Conveyance effective November 1, 1980, Southland conveyed the Royalty that burdens the Subject Interests in properties located in the San Juan Basin of northwestern New Mexico to the Trust. Subsequent to the Conveyance of the Royalty, through a series of sales, assignments and mergers, Southland’s successor became Hilcorp, which acquired the Subject 9 Table of Contents Interests from Burlington Resources Oil & Gas Company LP (“Burlington”), an indirect wholly-owned subsidiary of ConocoPhillips, on July 31, 2017. The Royalty constitutes the principal asset of the Trust. The beneficial interest in the Royalty is divided into 46,608,796 units (the “Units”) representing undivided fractional interests in the beneficial interest of the Trust equal to the number of shares of the common stock of Southland outstanding as of the close of business on November 3, 1980. Each stockholder of Southland of record at the close of business on November 3, 1980, received one freely tradable Unit for each share of the common stock of Southland then held. Holders of Units in the Trust are referred to herein as “Unit Holders.” On August 30, 2023, the Trustee entered into a First Amendment to the Conveyance (the “Amendment”). The Amendment was entered into (i) pursuant to the terms of the Compromise and Settlement Agreement entered into August 30, 2023, which resolved certain disputed expenses for the period from 2017 through 2020 by payment to the Trust and (ii) to modify certain terms of the Conveyance of the Royalty with respect to expenses associated with the operator’s saltwater disposal facilities. The Trustee The primary function of the Trustee is to collect Royalty Income, to pay all expenses and charges of the Trust, and to distribute the remaining available income to the Unit Holders. The amount of income distributable to Unit Holders, which the Trust refers to as “Distributable Income,” depends on the amount of Royalty Income and interest received by the Trust, as well as the amount of expenses paid by the Trust and any change in cash reserves. The Trust has no employees, officers, or directors. The Trustee performs all administrative functions of the Trust. Argent Trust Company has served as Trustee since February 15, 2024. Hilcorp Hilcorp is the principal operator of the majority of the Subject Interests and is responsible, subject to the terms of a prior agreement with the Trust, for marketing the oil and natural gas production from such properties, either under existing sales contracts or under future arrangements, at the best prices and on the best terms it shall deem reasonably obtainable under the circumstances. A very high percentage of the Royalty Income is attributable to the production and sale of natural gas, from the Subject Interests, by Hilcorp. Accordingly, the market price and demand for natural gas produced and sold from the San Juan Basin heavily influences the amount of Royalty Income distributed by the Trust and, by extension, the price of the Units. Natural Gas and Oil. The sale of San Juan Basin assets, including the Subject Interests, from Burlington to Hilcorp closed on July 31, 2017. Under the terms of the sale, Hilcorp is required to make payments to Burlington if natural gas prices are above a certain price. Hilcorp has confirmed that in accordance with the Conveyance, Hilcorp will not charge the Trust any portion of such payments. Gross Proceeds and Severance Tax Estimates. The Trustee has engaged and continues to engage with Hilcorp on an ongoing basis regarding Hilcorp’s accounting and reporting to the Trust. The Trust’s third-party compliance auditors continue to audit payments made by Hilcorp to the Trust, inclusive of sales revenues, production costs, capital expenditures, adjustments, actualizations, and recoupments. The Trust’s auditing process has also included detailed analyses of Hilcorp’s pricing and rates charged. As previously disclosed in the Trust’s filings, these revenues and costs (along with all costs) are the subject of the Trust’s ongoing comprehensive audit process by professional consultants and outside counsel to help evaluate compliance with the underlying operative Trust agreements and evaluate potential remedies in the event there is suspected non-compliance. Hilcorp transitioned to a new accounting system in 2021. During and immediately following the transition period, revenue and severance taxes on the distributions to the Trust were estimated. Then, in 2021 and 2022, various adjustments were made to reconcile actual revenue and severance taxes to the previously reported estimates. Hilcorp conducted a process review of the new accounting system that included review of production volume allocations for 2017 through 2020 and resulted in reallocations of affected volumes for many of the Trust properties. In February 2026, Hilcorp applied a negative prior period adjustment of ($3,472,228) gross (($2,604,171) net to the Trust) for the period from 2017 through 2020. The Trust’s joint interest auditors are reviewing the negative prior period adjustment, as previously certain underpayments were identified for this same period from 2017 through 2020 which culminated in a payment to the Trust in 2023 of $1,037,093.45. The amount of Gross Proceeds also depends on the volumes of natural gas and oil produced from the Subject Interests. Under the terms of the Indenture, the Trust cannot acquire new natural gas and oil assets, and as a result, Royalty Income is dependent on the natural gas and oil volumes attributable to the Subject Interests. Although Hilcorp and other operators of the Subject Interests may conduct drilling operations or well recompletions in the near term, the Subject Interests are depleting assets; Hilcorp has informed the Trust that it is unable to estimate the productive life of the Subject Interests. The reduction in proved reserve quantities is a common measure of depletion. Hilcorp’s (or a future operator’s) capital investments in the Subject Interests will affect the quantity of proved reserves and can offset any reduction in proved reserves. Lower commodity prices may also reduce the volume of natural gas and oil produced from the Subject Interests by Hilcorp. 10 Table of Contents On February 19, 2026, the Trust announced that Hilcorp had provided the Trust with its 2026 capital project plan for the Subject Interests (the “2026 Plan”), and Hilcorp has estimated its 2026 capital expenditures for the Subject Interests to be approximately $14.0 million. Hilcorp informed the Trust that its 2026 Plan for the Subject Interests includes 32 projects. Approximately $11.5 million of the $14.0 million budget in the 2026 Plan was initially allocated to nine new vertical drill projects to be completed in the Mesaverde, Mancos, and Dakota formations and six new horizontal drill projects in the Mancos formation. Hilcorp also informed the Trust that costs associated with the six new horizontal drill projects include drilling costs only. Completion costs for the horizontal wells are expected to be included in Hilcorp’s 2027 capital plan for the Subject Interests, which is expected to be provided to the Trust sometime in the first quarter of 2027. Approximately $2.0 million of the $14.0 million budget of the 2026 Plan will be allocated to 17 projects for recompletions and workovers in the Fruitland Coal and Pictured Cliffs formations, and approximately $0.5 million of the $14.0 million budget will be allocated to facilities projects related to natural gas compression and other facilities projects. Hilcorp further informed the Trust that its 2026 Plan is subject to revision if Hilcorp revises its assumptions underlying the 2026 Plan, and that actual capital costs may vary from these estimates. Hilcorp reported to the Trust that five of the nine vertical wells previously included in Hilcorp’s 2026 development plan for the Subject Interests have been removed from Hilcorp’s current plan due to changes in Hilcorp’s drilling schedule, representing approximately $450,000 of total capital expenditures from the initial budget in the 2026 Plan. Hilcorp further advised that, of the remaining four vertical wells, one is in progress, two have been completed, and one is awaiting third-party connection and flow. As of June 30, 2026, Hilcorp has spent $4.03 million of the $14.0 million budgeted under the 2026 Plan. Under the terms of the Conveyance, production costs are deducted from Gross Proceeds in calculating Net Proceeds, which is multiplied by 75% to calculate Royalty Income. “Production Costs” generally means costs incurred on an accrual basis by Hilcorp in operating the Subject Interests, including both capital and non-capital costs. For example, these costs include development drilling, production and processing costs, applicable taxes and operating charges. However, Hilcorp informed the Trust that for wells operated by Hilcorp it did not intend to accrue lease operating expenses to the Trust. If Production Costs exceed Gross Proceeds in any month, the excess is recovered out of future Gross Proceeds prior to making any further payments to the Trust. However, the Trust is not otherwise liable for any Production Costs or other costs or liabilities attributable to the Subject Interests or the minerals produced therefrom. If at any time the Trust receives more than the amount due under the Royalty, it is not obligated to return such overpayment, but the amounts payable to it for any subsequent period are reduced by such amount, plus interest, at a rate specified in the Conveyance. The Trust and the Trustee have very limited authority to control the amount and timing of Production Costs. The Trustee continues to engage with Hilcorp regarding its ongoing accounting and reporting to the Trust, and the Trust’s third-party compliance auditors continue to audit all payments made by Hilcorp to the Trust, including adjustments, true-ups, and recoupments. In addition, the Trustee continues to consult with outside counsel to review the rights of the Trust with respect to these matters and to evaluate any available potential legal remedies. Factors that Affect Net Proceeds. Generally, Net Proceeds are affected by (a) disruptions caused by weather, particularly winter storms that disrupt access to the production fields, (b) the timing and size of Hilcorp’s capital expenditures, and other Production Costs, and (c) commodity prices. Weather. Hilcorp has advised the Trust that it is possible for it to experience disruptions during the winter months that could impact Hilcorp’s ability to access fields and maintain production. Capital Expenditures. The timing and size of capital expenditures by Hilcorp have impacted and continue to impact Net Proceeds. Hilcorp’s capital expenditures were $3,274,424 and $4,032,994 for the three and six months ended June 30, 2026, respectively. This reflects an increase of $764,797 for the three months ended June 30, 2026 and a decrease of $12,523,993 for the six months ended June 30, 2026, when compared to the same periods in 2025. The decrease for the six months ended June 30, 2026 was due to the lower capital expense budget for 2026 and the completion of the two new horizontal wells under Hilcorp’s 2024 plan during the first quarter of 2025. Excess Production Costs. Excess Production Costs occur when Production Costs and capital expenditures exceed the Gross Proceeds for a certain period. Excess Production Costs accrued due to significant lease operating expenses and capital expenditures associated with Hilcorp's drilling of two new horizontal wells. From January 1, 2025 through March 31, 2026, net proceeds of $15,061,188, which amount would otherwise have been payable to the Trust as royalty income, were applied to the balance of the Excess Production Costs. The balance of cumulative Excess Production Costs, as of March 31, 2026, was approximately $6,186,819 ($4,640,115 net to the Trust). As of June 30, 2026, the balance of cumulative Excess Production Costs was $9,258,749 ($6,944,062 net to the Trust), an increase of $3,071,930 ($2,303,948 net to the Trust). Hilcorp will not pay Royalty Income to the Trust, and no cash distributions will be made by the Trust until the balance of Excess Production Costs is extinguished, Trust liabilities are paid in full, and the Trust’s cash reserves are replenished. 11 Table of Contents Commodity Prices. The Trust’s income and monthly distributions from the Subject Interests are heavily influenced by the price of natural gas and oil. These prices may fluctuate widely in response to relatively minor changes in the supply of and demand for natural gas and oil based on market uncertainty or a variety of additional factors that are beyond the Trustee’s control. Hilcorp has multiple purchase agreements that set forth the prices it will receive for the natural gas and oil produced from the Subject Interests. There is a differential in the prices reflected in the market indices and the prices received and reported because the prices received and reported vary by purchase agreement, and they are determined after deducting gathering, processing, and marketing costs for both gas and natural gas liquids. These purchase agreements and costs are subject to a comprehensive audit process by professional accountants and consultants. Results of Operations – for the Three and Six Months Ended June 30, 2026 and 2025 Royalty Income. Royalty Income consists of 75% of the monthly Net Proceeds attributable to the Royalty. Royalty Income for the three and six months ended June 30, 2026, and 2025 was determined as shown in the following table: For the Three Months Ended June 30, For the Six Months Ended June 30, . 2026 2025 2026 2025 Gross proceeds from the Subject Interests: Natural gas $ 10,247,135 $ 18,993,331 $ 28,338,686 $ 42,200,049 Oil 820,073 419,670 1,301,676 933,365 Other(1) — — (3,472,228 ) — (2) Total 11,067,208 19,413,001 26,168,134 43,133,414 Production Costs: Severance tax – gas 1,223,585 1,597,470 3,036,228 3,746,825 Severance tax – oil 87,330 35,831 142,978 93,049 Lease operating expense and property tax 9,553,799 8,333,314 19,776,148 16,291,732 Capital expenditures 3,274,424 2,509,627 4,032,994 16,556,987 Other — (1) (35,247 ) — (1) (35,247 ) Total Production Costs 14,139,138 12,440,995 26,988,348 36,653,346 Royalty profits (losses) (3,071,930 ) 6,972,006 (820,214 ) 6,480,068 Cumulative Excess Production Costs(2) 3,071,930 (6,972,006 ) 820,214 (6,480,068 ) Net profits — — — — Net overriding royalty interest 75 % 75 % 75 % 75 % Royalty Income $ — $ — $ — $ — (1)Other revenue consists of a ($3,472,228) gross (($2,604,171) net to the Trust) prior period adjustment from the 2017 through 2020 joint venture audit. The Trust’s joint interest auditors are reviewing that negative prior period adjustment. (2)The balance of Excess Production Costs for the three months ended June 30, 2026 increased $3,071,930 and $820,214 for the three and six months ended June 30, 2026, respectively, bringing the balance to $9,258,749 ($6,944,062 net to the Trust) as of June 30, 2026. The Conveyance provides that any Excess Production Costs applicable to the Subject Interests over Gross Proceeds from such properties must be recovered from future Net Proceeds before Royalty Income is again paid to the Trust. The Trust is not obligated to reimburse Hilcorp for any Excess Production Costs if future Gross Proceeds from the Subject Interests are insufficient to cover such costs. There was no Royalty Income distributed to the Trust for the three months ended June 30, 2026 and 2025. The average natural gas price decreased from $2.68 per Mcf for the three months ended June 30, 2025, to $1.70 per Mcf for the three months ended June 30, 2026. The average natural gas price also decreased from $2.87 per Mcf for the six months ended June 30, 2025 to $2.29 per Mcf for the six months ended June 30, 2026. Production of natural gas from the Subject Interests decreased from 7,085,582 Mcf for the three months ended June 30, 2025, to 6,034,995 Mcf for the three months ended June 30, 2026. Production of natural gas from the Subject 12 Table of Contents Interests also decreased from 14,706,475 Mcf for the six months ended June 30, 2025 to 12,386,781 Mcf for the six months ended June 30, 2026. Gross Proceeds from Subject Interests. Total Gross Proceeds decreased approximately $8.3 million, or 43.0%, for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. Total Gross Proceeds decreased approximately $17.0 million or 39.3% for the six months ended June 30, 2026 compared to the same time period in 2025. The decreases were primarily due to lower natural gas pricing. Capital Expenditures. The timing and size of capital expenditures by Hilcorp have and will continue to impact Net Proceeds. Hilcorp's capital expenditures increased $764,797 for the three months ended June 30, 2026, compared to the three months ended June 30, 2025, and decreased $12,523,993 for the six months ended June 30, 2026, compared to the same time period in 2025. The increase in capital costs in the three-month period ended June 30, 2026 was primarily attributable to drilling commencing as part of Hilcorp's 2026 Plan (as defined below). The decrease in capital costs in the six-month period was primarily attributable to Hilcorp's completion of the two new horizontal wells as part of the 2024 plan in the first quarter of 2025. On February 19, 2026, the Trust announced that Hilcorp had provided the Trust with its 2026 capital project plan for the Subject Interests (the “2026 Plan”), and Hilcorp estimated its 2026 capital expenditures for the Subject Interests to be approximately $14.0 million. Hilcorp informed the Trust that its 2026 Plan for the Subject Interests includes 32 projects. Approximately $11.5 million of the $14.0 million budget in the 2026 Plan will be allocated to nine new vertical drill projects to be completed in the Mesaverde, Mancos, and Dakota formations and six new horizontal drill projects in the Mancos formation. Hilcorp also informed the Trust that costs associated with the six new horizontal drill projects include drilling costs only. Completion costs for the horizontal wells are expected to be included in Hilcorp’s 2027 capital plan for the Subject Interests, which is expected to be provided to the Trust sometime in the first quarter of 2027. Approximately $2.0 million of the $14.0 million budget of the 2026 Plan will be allocated to 17 projects for recompletions and workovers in the Fruitland Coal and Pictured Cliffs formations, and approximately $0.5 million of the $14.0 million budget will be allocated to facilities projects related to natural gas compression and other facilities projects. Hilcorp further informed the Trust that its 2026 Plan is subject to revision if Hilcorp revises its assumptions underlying the 2026 Plan, and that actual capital costs may vary from these estimates. Hilcorp has since reported to the Trust that five of the nine vertical wells previously included in Hilcorp’s 2026 development plan for the Subject Interests have been removed from Hilcorp’s current plan due to changes in Hilcorp’s drilling schedule, representing approximately $450,000 of total capital expenditures from the initial budget in the 2026 Plan. Hilcorp further advised that, of the remaining four vertical wells, one is in progress, two have been completed, and one is awaiting third-party connection and flow. As of June 30, 2026, Hilcorp has spent $4.03 million of the $14.0 million budgeted under the 2026 Plan. Severance Taxes. Aggregate severance taxes decreased approximately $0.3 million, or 19.7%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025 and decreased approximately $0.7 million or 17.2% for the six months ended June 30, 2026 compared to the same time period during 2025. The decrease was primarily attributable to lower Gross Proceeds. Severance taxes represented approximately 11.8% of Gross Proceeds for the three months ended June 30, 2026 compared to approximately 8.4% for the same period of 2025. Severance taxes represented approximately 12.1% of Gross Proceeds for the six months ended June 30, 2026 and approximately 8.9% for the same period of 2025. Lease Operating Expenses and Property Taxes. Lease operating expenses and property taxes increased $1.2 million or 14.6%, for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, lease operating expenses and property taxes increased approximately $3.5 million or 21.4% compared to the six months ended June 30, 2025. Excess Production Costs. For the three months ended June 30, 2026, Excess Production Costs of $3,071,930 ($2,303,948 net to the Trust) were added to the previous balance of $6,186,819 ($4,640,115 net to the Trust). The Conveyance provides that Excess Production Costs must be recovered from future Net Proceeds before Royalty Income is again paid to the Trust. The Trust is not obligated to reimburse Hilcorp for any excess Production Costs if future Gross Proceeds from the Subject Interests are insufficient to cover such costs. As such, the cumulative balance of Excess Production Costs as of June 30, 2026 was $9,258,749 ($6,944,062 net to the Trust). Distributable Income. Distributable Income for the three and six months ended June 30, 2026, and 2025 was determined as shown in the following table: 13 Table of Contents Three Months Ended June 30, For the Six Months Ended June 30, 2026 2025 2026 2025 Royalty income $ — $ — $ — $ — Interest income 184 2,985 385 11,223 Total income 184 2,985 385 11,223 General and administrative expenses (198,556 ) (391,330 ) (570,380 ) (901,966 ) Change in cash reserves 4,415 225,562 13,332 727,960 Distributable Income (Loss) $ (193,957 ) $ (162,783 ) $ (556,663 ) $ (162,783 ) Distributable Income (Loss) per Unit (46,608,796 Units) $ (0.00416 ) $ (0.00349 ) $ (0.01194 ) $ (0.00349 ) Distributable Income (Loss) changed $0.031 million ($31,174) for the three months ended June 30, 2026. The change in Distributable Income (Loss) was primarily attributable to a reliance on the line of credit to pay trust expenses and less cash reserves being utilized. Interest Income. Interest income decreased for the three and six months ended June 30, 2026, as compared to the same periods in 2025 primarily due to the lack of Royalty Income and the reduction in cash reserves held by the Trustee. General & Administrative Expenses. General and administrative expenses decreased by $192,774 (49.3%) for the three months ended June 30, 2026 compared to the three months ended June 30, 2025. For the six months ended June 30, 2026, general and administrative expenses decreased by $331,586 (36.5%) compared to the six months ended June 30, 2025 primarily due to differences in the timing of the receipt and payment of certain Trust expenses. Cash Reserves. Total cash reserves were $4,019 as of June 30, 2026. The Trustee is authorized to determine, in its discretion, the amount of cash reserves needed to cover liabilities and contingencies of the Trust. The Trustee had cash reserves of $1,800,000 as of April 30, 2024. Cash reserves of $1,541,479, along with interest income, were utilized to pay the balance of Trust administrative expenses remaining (after applying interest income) each month from May 2024 through March 2025, when the Trust did not receive any Royalty Income. From June 2025 through May 2026, cash reserves were used to pay interest on the Line of Credit. Prior to any distributions to Unit Holders, the Trustee plans to replenish the cash reserves and continue to increase the cash reserves to at least $2,000,000. Liquidity and Capital Resources The Trust’s principal source of liquidity and capital is Royalty Income. The Trust’s distribution of income to Unit Holders is funded by Royalty Income after payment of Trust expenses. The Trust is not liable for any Production Costs or liabilities attributable to the Royalty. If at any time the Trust receives more than the amount due under the Royalty, it is not obligated to return such overpayment, but the amounts payable to it for any subsequent period are reduced by such amount, plus interest, at a rate specified in the Conveyance. If the Trustee determines that the Trust does not have sufficient funds to pay its liabilities, the Trustee may borrow funds on behalf of the Trust, in which case no distributions will be made to Unit Holders until such borrowings are repaid in full. The Trustee may not sell or dispose of any part of the assets of the Trust without the affirmative vote of the Unit Holders of 75% of all of the Units outstanding; however, the Trustee may sell up to 1% of the value of the Royalty (as determined pursuant to the Indenture) during any 12-month period without the consent of the Unit Holders. In each of the months from May 2024 through June 2026, the Trust did not receive any Royalty Income, and interest income received was insufficient to pay Trust liabilities. Since the Trust did not receive Royalty Income from Hilcorp and interest income was insufficient to pay the Trust’s liabilities during the period from May 2024 through June 2026, the Trust was able to use cash reserves to pay the Trust’s liabilities from May 2024 through May 2025. As of June 30, 2026, the balance of cash reserves was $4,019. The Trust is permitted to borrow funds against the Royalty to cover the Trust’s operating expenses. On May 21, 2025, the Trust established the Line of Credit with Texas Bank, and intends to use the funds as needed to cover the Trust’s administrative expenses until the Trust receives Royalty Income in amounts sufficient to (a) repay the balance of Excess Production Costs, (b) replenish a reserve in the amount of $2,000,000, and (c) repay the Note in full, after which time, the Trust will resume distributions to the holders of the Trust’s Units of beneficial interest. Funds from the Line of Credit were utilized to pay Trust administrative expenses, net of interest earned on Trust cash accounts, from June 2025 through June 2026 and to pay interest on the Line of Credit in June 2026. Cash reserves were utilized to pay interest accrued on the Line of Credit for the months of July 2025 through May 2026. As of June 30, 2026, the outstanding balance on the Line of Credit was $944,471 and the balance of cash reserves maintained by the Trust is currently $4,019. The anticipated deficit in income to pay the Trust’s liabilities described above raises substantial doubt about the Trust’s ability to continue as a going concern within one year after issuance date of the financial statements. 14 Table of Contents The accompanying financial statements have been prepared assuming that the Trust will continue as a going concern; however, the above conditions raise substantial doubt about the Trust’s ability to do so. The financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result should the Trust be unable to continue as a going concern. Natural Gas and Oil Production The natural gas volumes reported to the Trust by Hilcorp are based on plant residue gas volumes plus equivalent volumes for natural gas liquids. Hilcorp converts one barrel of natural gas liquids to six Mcf of natural gas using industry standards. Royalty Income, if any, for the three months ended June 30, 2026, is associated with natural gas and oil production during the period from February 2026 through April 2026. Royalty Income, if any, for the six months ended June 30, 2026, is associated with natural gas and oil production from the Subject Interests during the period from November 2025 through April 2026. Production of natural gas and oil and related average sales prices attributable to each of the Subject Interests and the Royalty for the three months ended June 30, 2026, and 2025 were as follows: For the Three Months Ended June 30, 2026 2025 Natural Gas (Mcf) Oil and Condensate (Bbls) Natural Gas (Mcf) Oil and Condensate (Bbls) Production Subject Interests 6,034,995 10,557 7,085,582 7,654 Royalty (2,383,581 ) 6,360 1,731,676 4,637 Average Price (per Mcf/Bbl) $ 1.70 $ 77.68 $ 2.68 $ 54.83 Production of natural gas and oil and related average sales prices attributable to each of the Subject Interests and the Royalty for the six months ended June 30, 2026 and 2025 were as follows: For the Six Months Ended June 30, 2026 2025 Natural Gas (Mcf) Oil and Condensate (Bbls) Natural Gas (Mcf) Oil and Condensate (Bbls) Production Subject Interests 12,386,782 20,263 14,706,475 16,003 Royalty (869,580 ) 11,760 (238,581 ) 7,838 Average Price (per Mcf/Bbl) $ 2.29 $ 64.24 $ 2.87 $ 58.33 Based on Hilcorp’s reporting methodology, the Trust recognizes production during the month in which the related Royalty Income is paid to the Trust. Royalty Income for a calendar year is based on the actual natural gas and oil production during the period beginning with November of the preceding calendar year through October of the current calendar year. Sales volumes attributable to the Royalty are determined by dividing the net profits by the Trust from the sale of natural gas and oil, respectively, by the prices received for sales of such volumes from the Subject Interests, taking into consideration production taxes attributable to the Subject Interests. Because the natural gas and oil sales attributable to the Royalty are based upon an allocation formula dependent on such factors as price and cost, including capital expenditures, the aggregate sales amounts from the Subject Interests may not provide a meaningful comparison to sales attributable to the Royalty. Production Volumes Natural Gas Natural gas production volumes decreased for the Subject Interests and the Royalty by 1,050,587 Mcf (14.8%) and 4,115,257 Mcf (237.6%), respectively, for the three months ended June 30, 2026, as compared to the same period in 2025. For the six months ended June 30, 2026, natural gas production volumes decreased by 2,319,693 Mcf (15.8%) for the Subject Interests and decreased by 630,999 Mcf (264.4%) for the Royalty compared to the same period in 2025. Royalty volume is calculated using a formula determined by revenue less expenses. Excess Production Costs contributed to the decrease in natural gas production volumes and negative volumes for the Royalty. The decrease in production volume was also affected by a natural decline in the producing properties, market conditions, and a decrease in demand. Natural gas production is also influenced by the line pressure of the natural gas gathering systems in the San Juan Basin. 15 Table of Contents Oil Oil production volumes increased for the Subject Interests by 2,903 Bbls (37.9%) for the three months ended June 30, 2026, as compared to the same period in 2025. Oil production volumes increased for the Royalty by 1,723 Bbls (37.1%) for the three months ended June 30, 2026, as compared to the same period in 2025. For the six months ended June 30, 2026, oil production volume increased by 4,260 Bbls (26.7%) for the Subject Interests and 3,922 Bbls (50.0%) for the Royalty as compared to the same period in 2025. These changes generally resulted from changes in the demand for natural gas and oil during the applicable time periods, natural gas and oil inventory levels, availability of market conditions, and an increase in capital spending to generate production from new and existing wells. Sales Prices Natural Gas The average realized natural gas price per Mcf decreased for the three and six months ended June 30, 2026, as compared to the same periods in 2025. This decrease was primarily due to a decrease in the El Paso Natural Gas Company, San Juan Basin Index pricing. Oil The average realized oil price per Bbl increased for the three and six months ended June 30, 2026 as compared to the same periods in 2025. This increase was primarily due to an increase in the WTI benchmark oil price. Marketing There were no changes to the contracts pursuant to which Hilcorp sells production from the Subject Interests and for the gathering and processing of production during the three months ended June 30, 2026. Off-Balance Sheet Arrangements None. Critical Accounting Policies and Estimates For a discussion of significant accounting policies and estimates that impact the Trust’s financial statements, see Part I, Item 1. Unaudited Financial Statements, Note 3 Basis of Presentation in this Quarterly Report and Part II, Item 8. Financial Statements and Supplemental Data contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2025. Hilcorp Information As a holder of a net overriding royalty interest, the Trust’s reporting of financial information is reliant upon Hilcorp to accurately and timely report information regarding Hilcorp and its affiliates; the Subject Interests, including the operations, acreage, well and completion count, working interests, production volumes, sales revenues, capital expenditures, operating expenses, reserves, drilling plans, drilling results and leasehold terms related to the Subject Interests, and factors and circumstances that have or may affect the foregoing. See Part I, Item 4. Controls and Procedures. For information on the Trust’s exposure to market risk, please see Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” contained in the Trust’s Annual Report on Form 10-K for the year ended December 31, 2025. 16 Table of Contents